Thanks for your comment. Please review the stated motivation for a reduction in issuance. If you do not agree, you might wish to address the provided motivation. As outlined in the answer to Keyneom, we can easily expect the implied cost reduction to be in the region of a billion dollars per year at the current token price. Since it is a yearly reduction, any valuation of this improvement would need to be at least an order of magnitude higher. Furthermore, as noted in the post: it is valuable to have trustless sound money as the primary currency in a decentralized economy. High issuance can lead a liquid staking token (LST) to dominate as money . Lower issuance ensures that app developers and users will not be subjected to monopolistic pressure from LST issuers, or needlessly risk the LST failing, potentially even threatening consensus if an LST becomes “too big to fail ”.
Also briefly around specific comments:
Point 1.
The supply curve would need to be quite a bit lower than today for the yield to drop under 1%. Refer to the full blue supply curve in the post that already is lower than the current supply curve, with the equilibrium staking yield still staying well above 1% in the practical endgame.
I would consider it a bigger risk that solo stakers stop staking than become LST node operators. Julian’s exposition of stake modalities can be useful for you to consider. It leads to the following theorem:
In essence, when applied to your suggestion, you can think of the analysis as stating in mathematical terms “if solo stakers can increase risk-adjusted rewards by becoming node operators, why aren’t they doing it right now?”
There are then potential edge cases:
But these should not dominate. My point would be that focusing on if solo stakers might stop staking to a higher degree than delegating stakers at some specific yield is more important than if they change modality.
Point 2.
References to the motivation for an issuance reduction were provided at the beginning of my comment. Note that the motivation relates to structural aspects that lead to problems
- over long time-frames (too high costs degrading value of Ethereum),
- predominantly for cryptocurrencies with no native delegation (due to the proliferation of LST),
- evident in the event that something goes wrong and Ethereum must rely upon a social layer not caught up in the issue.
It is not like a bug that just crashes the system, more like memory leak. Furthermore, although cause and effect are difficult to separate, Ethereum is by far the most successful PoS cryptocurrency. It is therefore a hard sell to use less successful PoS cryptocurrencies with higher staking ratios as examples to strive for, if no other motivation is provided.
Point 3.
Ethereum should not harness people’s bounded understanding of yield, and keep it high to trick users into thinking that they gain something, when they do in fact not. Refer to this write-up.
Furthermore, the goal is to ensure sufficient economic security; in essence, to keep Ethereum secure. Just as in any other endeavor, it is possible to pay too much. Paying too much can even make Ethereum less secure in the long run. Refer to this write-up.
I hope you have found some points in my comment worthy of further consideration.